Vantage Drilling (NYSE: VTG) said Tuesday that the company has invested $31 million in a new joint venture established for the purpose of constructing a new, high specification drillship at STX Offshore & Shipbuilding Co. Ltd.’s yard in South Korea, with options for four more beyond that.
For STX, this is huge news as the approximate value of the newbuild contract is USD $672 million, amounting up to $3.5 billion dollars in total including 4 option units. That’s more than half of STX O&S annual performance of $6.6 billion.
Paul Bragg, Vantage’s Chairman and CEO, commented, “We view this high-spec drillship construction project as an excellent opportunity for Vantage to further grow our presence in the expanding ultra-deepwater drilling market, with only a small capital commitment. Our partners have been some of the most innovative and successful in this industry. STX and our major equipment providers have excellent track records and technical expertise. We believe that the construction contract provides exceptional value, attractive terms and the high end of available technology.”
Through its investment, Vantage will initially own approximately 42% of equity in the joint venture entity, known as Sigma Drilling Ltd. a company established by Skeie Technology AS in Norway.
Sigma was formed for the sole purpose of constructing a BT-UDS Dynamical Positioned Ultra Deepwater Drillship at STX Offshore & Shipbuilding. The vessel will be capable of and equipped to operate in 12,000 ft water depth, have 25,000 metric ton variable deck load, outfitted with a dual activity derrick, equipped with two seven-ram blow out preventer units and capable of storing up to twelve subsea X-mas trees. The vessel will feature a cutting-edge drilling package that is at the forefront of drilling technology. Delivery of the Vessel is expected in November 2015.
The initial equity funding by the partners is expected to be enough to cover all of the shipyard and other capital expenditures which require payment prior to the completion and delivery of the drillship.
Besides the obvious financial obligation, Vantage’s role in the project will be to provide construction oversight and the company will also manage the future operation of drilling services.
Vantage’s owned fleet currently consists of four Baker Marine Pacific Class 375 ultra-premium jackup drilling rigs and two ultra-deepwater drillships, the Platinum Explorer and the Titanium Explorer, as well as an additional ultra-deepwater drillship, the Tungsten Explorer, now under construction.